Russia Interest Rate

The Bank of Russia held its benchmark one-week repo rate at 7.75 percent on February 8th, after an unexpected 25bps hike in the previous meeting aimed at limiting inflation risks following the VAT increase last month. Policymakers expect annual inflation to range between 5.0 and 5.5 percent by the end of 2019 and return to 4 percent in the first half of 2020. Interest Rate in Russia averaged 7.31 percent from 2003 until 2019, reaching an all time high of 17 percent in December of 2014 and a record low of 5 percent in June of 2010.

Interest Rate in Russia is expected to be 7.75 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in Russia to stand at 7.00 in 12 months time. In the long-term, the Russia Interest Rate is projected to trend around 6.50 percent in 2020, according to our econometric models.

Trading Economics members can view, download and compare data from nearly 200 countries, including more than 20 million economic indicators, exchange rates, government bond yields, stock indexes and commodity prices.

Russia Holds Key Interest Rate at 7.75%

The Bank of Russia held its benchmark one-week repo rate at 7.75 percent on February 8th, after an unexpected 25bps hike in the previous meeting aimed at limiting inflation risks following the VAT increase last month. Policymakers expect annual inflation to range between 5.0 and 5.5 percent by the end of 2019 and return to 4 percent in the first half of 2020.

Excerpts from the Information Notice of Bank of Russia:

Inflation dynamics. In January 2019, annual inflation held at the lower bound of the Bank of Russia expectations. Annual consumer price growth rose to 5.0% in January (vs 4.3% in December 2018). The contribution of the VAT increase to annual consumer price growth in January was moderate. The effect of the VAT increase on inflation can be fully captured no sooner than this April. Faster growth of food prices to 5.5% (vs 4.7% in December 2018) played a significant role in the inflation rise in January. The acceleration of food inflation is substantively attributable to the recovery after its considerable drop in the second half of 2017 and the first half of 2018. Furthermore, prices are completing their adjustment to the ruble’s weakening of the second half of 2018. Annual inflation of prices of non-food goods and services was below that of food prices during the last 12 months.

In January, price expectations of businesses increased on the back of the earlier weakening of the ruble and the VAT increase. Household inflation expectations rose only slightly.

According to the Bank of Russia forecast, the VAT increase and the 2018 weakening of the ruble will temporarily accelerate annual inflation, which will peak in the first half of 2019 and run at 5.0-5.5% by the end of 2019. Quarterly year-on-year consumer price growth is set to decelerate to 4% as early as the second half of 2019. Annual inflation will return to 4% in the first half of 2020 when the effects of the ruble’s weakening and the VAT rise peter out.

Economic activity. Rosstat’s flash estimate shows that 2018 GDP growth totalled 2.3%, which exceeds the Bank of Russia’s forecast of 1.5-2%. However, recent months have seen slower growth in economic activity. December recorded a decline of growth rates in industrial production, construction volumes, real wages and retail sales. The Bank of Russia maintains its 2019 GDP growth forecast in the range of 1.2-1.7%. The VAT increase might have a slight constraining effect on business activity, mostly early in the year. The newly received budgetary funds will be used to raise government spending including investment as early as 2019. Subsequent years might see higher economic growth rates as the planned structural measures are implemented.

Inflation risks. The balance of risks remains skewed towards pro-inflationary risks, especially over a short-term horizon, driven by the VAT increase and price movements in individual food products. Uncertainty remains over future external conditions and their impact on financial asset prices. Despite the oil price growth in January 2019, the risks of supply exceeding demand in the 2019 oil market remain high.

The revisions of the expected paths of monetary policy tightening by the US Federal Reserve and other central banks in developed markets reduce the risks of persistent capital outflows from emerging markets. At the same time, geopolitical factors might lead to strengthened volatility in commodity and financial markets, affecting exchange rate and inflation expectations.

In its key rate decision-making, the Bank of Russia will determine if the increases of the key rate in September and December 2018 were sufficient to bring annual inflation back to the target in 2020, taking into account inflation and economic performance against the forecast, as well as the risks associated with external conditions and financial markets’ response to them.

Russia Hikes Key Interest Rate to 7.75%
The Bank of Russia raised unexpectedly its benchmark one-week repo rate by 25 bps to 7.75 percent on December 14th, saying the decision is aimed at limiting inflation risks that remain elevated, especially over the short-term horizon on the back of the upcoming VAT rate increase. Policymakers expect annual inflation to be 5-5.5 percent by the end of 2019, before returning to 4 percent in 2020.Published on 2018-12-14

Russia Holds Key Interest Rate at 7.5%
The Bank of Russia held its benchmark one-week repo rate at 7.5 percent on October 26th after an unexpected 25 bps hike in the previous meeting, saying pro-inflationary risks remain elevated and uncertainties over future external conditions persist. Policymakers expect annual inflation to be 5-5.5 percent in 2019, before returning to 4 percent in 2020.Published on 2018-10-26

Russia Unexpectedly Hikes Rates to 7.5%
The Bank of Russia raised its key rate by 25bps to 7.5 percent on September 14th 2018, beating markets that expected no changes. It is the first rate hike since December of 2014, as external uncertainties and volatility in financial markets increased inflationary risks. The central bank increased inflation forecasts to 3.8-4.2 percent in 2018 from 3.5-4 percent and said will consider further tightening if necessary.Published on 2018-09-14

Russia Holds Key Interest Rate at 7.25%
The Bank of Russia held its benchmark one-week repo rate at 7.25 percent on July 27th despite low inflation, saying uncertainty persists over how strongly the planned increase of the value added tax may affect inflation expectations and how the external conditions will develop. Policymakers expect annual inflation to be 3.5-4 percent in late 2018 and to temporarily overshoot 4 percent in 2019, before returning to 4 percent in early 2020. Published on 2018-07-27

Russia Interest Rate

In Russia, interest rate decisions are taken by the Central Bank of the Russian Federation. From September 16th of 2013, the official interest rate is the one-week auction repo rate. Until September 15th of 2013, the official interest rate was the refinancing rate, which was seen as a ceiling for borrowing money and a benchmark for calculating tax payments. This page provides the latest reported value for - Russia Interest Rate - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news. Russia Interest Rate - actual data, historical chart and calendar of releases - was last updated on March of 2019.